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- September 1, 2008: Vol. 2, Number 9

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In for the Long Haul

by Paul Sanderson

Although the value of the real estate capital market continued to grow last year to reach $12 trillion (Ä7.7 trillion), 2007 witnessed a sea-change in the global investment environment, following what the International Monetary Fund has labelled “the largest financial shock since the Great Depression”.

Although this was initially triggered by problems in the U.S. subprime residential market, it has involved a general loss of confidence in asset-backed securities, a collapse in debt issuance, IPOs, M&A and other indicators of market activity, unprecedented liquidity problems in the interbank markets, the failure of a U.K. mortgage lender and a major U.S. securities firm, and widespread losses throughout the financial system.

To date, the major U.S. and European banks have written off in excess of $300 billion (Ä193 billion) and ultimate subprime-related losses have been e

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